What is the condition that allows a Cicis franchisee to have a one-time right to permanently close the Restaurant under the Reopen Incentive Program Addendum?
Cicis Franchise · 2025 FDDAnswer from 2025 FDD Document
he Franchise Agreement to the contrary, you and we agree as follows:
Provided you and your affiliates are in good standing, for Net Sales generated through the 1st anniversary of the Effective Date of this Agreement, the Royalty Fee will be calculated at 3% of those Net Sales; and for Net Sales generated from the day following the 1st anniversary of the Effective Date of this Agreement through the 2nd anniversary of the Effective Date of this Agreement, the Royalty Fee will be calculated at 4% of those Net Sales. If, at any time prior to the 2nd anniversary of the Effective Date of this Agreement, you cease to be in good standing, the foregoing Royalty Fee reductions will automatically, and without any further notice, be null and void, and the Royalty Fee will thereafter be calculated as described in the Franchise Agreement without regard to this paragraph.
- Right to Close Restaurant. You and we agree that you will have a one-time right to permanently close the Restaurant if, for the period beginning on the date the Restaurant reopens for regular business and ending on the day that is 1.5 years after that date (the "Assessment Period"), the Restaurant's EBITDA (earnings before interest, taxes, depreciation and amortization), considering only those expenses that are normal restaurant-level operating expenses, is a negative number.
Source: Item 23 — RECEIPTS (FDD pages 65–263)
What This Means (2025 FDD)
According to Cicis's 2025 Franchise Disclosure Document, a franchisee participating in the Reopen Incentive Program Addendum has a one-time right to permanently close their restaurant under a specific financial condition. This right is contingent upon the restaurant's financial performance during the Assessment Period, which spans the first 1.5 years after the restaurant reopens for regular business.
Specifically, the franchisee can exercise this closure right if the restaurant's EBITDA (earnings before interest, taxes, depreciation, and amortization) is a negative number during the Assessment Period, considering only normal restaurant-level operating expenses. To initiate the closure, the franchisee must provide Cicis with a profit and loss statement for the Assessment Period, prepared according to generally accepted accounting principles, demonstrating the negative EBITDA. This statement must be submitted no earlier than the end of the Assessment Period and no later than 30 days after its conclusion. The franchisee must also provide written notice of their intention to close the restaurant, including the intended closure date.
Prior to or on the closure date, both Cicis and the franchisee will execute a written mutual termination of the Franchise Agreement. This termination includes a general release of all claims the franchisee and their related parties might have against Cicis and its related parties. It also incorporates standard confidentiality and non-disparagement provisions, along with the franchisee's and their owners' agreement to comply with the obligations under the Franchise Agreement that are triggered by or survive the termination of the agreement. This provision offers a limited safety net for franchisees who reopen a previously closed Cicis location but struggle to achieve profitability, allowing them to exit the agreement under defined conditions while also protecting Cicis from potential liabilities.